‘Should I transfer a few thousand of that to my high yield savings account?’: I have money in my bank savings for emergencies, but is it worth it?

Hi Money Minder,

I’m pondering over the idea of HYSA versus a regular savings account. Right now, I’ve got $5,000 stashed away in my regular bank savings account, mainly for emergencies or big expenses.

But let’s face it, if a major expense came up, I’d probably just put it on my credit card. So, do I really need that much sitting in the bank savings account? Would it make more sense to move a few thousand over to my high yield savings account?

Thanks for your help,

Response from THE MONEY MINDER:

Hello There,

It sounds like you are on the right track with having both a regular bank savings account and a high yield savings account in place. Having $5,000 in your regular bank savings for emergencies or unexpected expenses is a good start. However, you bring up a valid point about potentially using a credit card for emergencies instead of dipping into your savings account.

In this case, it may make sense to reevaluate how much money you truly need in your regular bank savings account for emergencies. You could consider keeping enough to cover a few months’ worth of expenses or a specific amount that would make you comfortable in case of unexpected circumstances. Any extra funds that you feel comfortable moving can be transferred to your high yield savings account to take advantage of potentially higher interest rates.

Ultimately, it’s about finding a balance that works best for your financial goals and peace of mind. Having a mix of liquidity in your regular bank savings and higher interest in your high yield savings can be a good strategy. Take some time to review your current financial situation, assess your comfort levels, and make adjustments as needed.

Remember, it’s always wise to have some cash readily available for emergencies, but also consider the potential benefits of maximizing the growth of your money through higher interest rates in a high yield savings account. Make decisions that align with your financial goals and values.

Best of luck with your financial planning journey!

Farewell from THE MONEY MINDER.